AmTrust Financial
Download
1 / 16

AmTrust Financial - PowerPoint PPT Presentation


  • 64 Views
  • Uploaded on

AmTrust Financial. Forward Looking Statements. This presentation may include forward-looking statements. These forward-looking statements include comments with respect to our objectives and strategies, and the results of our operations and business.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' AmTrust Financial' - guglielmo-blaney


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript

Forward looking statements
Forward Looking Statements

This presentation may include forward-looking statements. These forward-looking statements include comments with respect to our objectives and strategies, and the results of our operations and business.

By their nature, however, these forward-looking statements involve numerous assumptions, risks, uncertainties and opportunities, both general and specific. The risk exists that these statements may not be fulfilled. Investors should not place undue reliance on these forward-looking statements as a number of factors could cause future company results to differ materially from these statements.

Potential risks and uncertainties include effects of government regulation, the outcome of our efforts to manage growth, the extent to which our premium rates and reserves are adequate, the extent of availability of reinsurance on favorable terms, changes in our financial ratings, the outcome of our efforts to enter our new specialty middle-market property and casualty segment, ability to retain and recruit key executives and other key personnel and changes in general economic conditions, including inflation and other factors.

When relying on forward-looking statements to make decisions, investors should carefully consider the aforementioned factors as well as other uncertainties and events including those discussed in the “Forward-Looking Statements” and “Risk Factors” sections of the prospectus.


Who we are
Who We Are

  • Multinational specialty property and casualty insurance company

  • Founded in 1998

  • Founders: Michael and George Karfunkel, Barry Zyskind

    • Inside ownership 57%

    • NASDAQ ticker symbol “AFSI”

  • “A-” rating from A.M. Best

  • We focus on underserved, niche markets:

    • Small business workers’ compensation (42.1% of GPW 6 months ended June 30, 2007)

    • Specialty risk and extended warranty (29.3% of GPW 6 months ended June 30, 2007)

    • Specialty middle-market property and casualty (28.6% of GPW 6 months ended June 30, 2007)

  • We have grown our business organically and through opportunistic renewal rights transactions

  • High teens ROE business model


Company overview
Company Overview

Gross Premiums Written

2005

$286 MM

2006

$526 MM

YTD 6/30/07

$400 MM

Mix of Business

Small Business Workers’ Compensation

Specialty Risk and Extended Warranty

Specialty Middle-Market P&C Insurance

2005

71.5%

28.5%

0%

49.2%

25.3%

25.5%

2006

42.1%

29.3%

28.6%

6/30/07

  • US only (31 states and DC)

  • $205 MM GPW in 2005

  • $258.9 MM GPW in 2006

  • $168.1 MM through 6/30/07

  • Insured Profile

    • Average premium < $5,000

  • Europe, US

  • $81 MM GPW in 2005

  • $132.8 MM GPW in 2006

  • $117.3 MM through 6/30/07

  • Warranty coverage for selected consumer and commercial goods

  • 50.6% of GPW through 6/30/07 was written outside US

  • US only (nationwide)

  • Entered through renewal rights transaction from Alea

  • $446 MM GPW (2004) and over $250 MM (9/30/05) for Alea

  • $134.3 MM in 2006

  • $114.3 MM through 6/30/07


Small business workers compensation
Small Business Workers’ Compensation

Target Customers

  • Average annual premium less than $5,000

  • Small employers – typically underserved by larger carriers

    • Average 6 employees

    • Low to mid hazard profile

  • Underserved segment, competitors include state funds and regional carriers

AmTrust Approach

  • Expense control

  • Paperless proprietary underwriting system

    • Risks individually underwritten

    • Prompt response to agents and insureds

  • 8,000 active agents

Result

  • Cost efficient strategy

  • Historically high retention and renewal rates (over 80%)

  • Historical organic premium growth of over 15% annually

  • Target combined ratio of 95% or better


Small business workers compensation cont d

Greater than 10%

Greater than 5% Less than 10%

Less than 5%

No Operations

Small Business Workers’ Compensation (cont’d)

Premium Distribution by State

(6 months ended June 30, 2007)

10.2%

5.8%

10.5%

11.8%

1.3%

4.1%

1.4%

1.5%

1.7%

3.3%

11%

2.7%

25%


Specialty risk and extended warranty
Specialty Risk and Extended Warranty

We provide extended warranties for a wide range of consumer and commercial goods

Target Customers

  • Manufacturers and retailers of consumer and commercial goods

  • Geography

    • Europe (50.6% of GPW for 6 months ended 6/30/07)

    • US (49.4% of GPW for 6 months ended 6/30/07)

AmTrust Approach

  • Extensive front-end diligence and actuarial review for each new product and client

  • Develop customized and strictly defined policy forms that fit the needs of the client

  • Proactively managing claims and adjusting premiums if needed

Result

  • Profit center or cost reduction for client

  • Cost effective for warranty buyer

  • Profitable for AmTrust


Specialty middle market p c alea
Specialty Middle Market P&C (Alea)

Expansion of workers’ comp, general liability & commercial auto and property coverage

Target Customers

  • Retail, wholesale, service operations covered through 25 wholesale agents

  • Lines of business: Workers’ compensation (37%), general liability (22%), commercial auto liability (28%), other (13%)

AmTrust Approach

  • Extensive front-end diligence and actuarial review for each new product and client

  • Develop customized and strictly defined policy forms that fit the needs of the client

  • Leverage proprietary technology systems to process business efficiently

Result

  • Business integration on-going

  • Most of Alea’s former senior management, underwriting and support team have joined AmTrust

  • Generated $114.3 MM of gross premiums written for the 6 months ended 6/30/07


History of disciplined growth
History of Disciplined Growth

  • We have grown our business organically and through:

    • Key hires of underwriting teams in the US and Europe

    • Opportunistic renewal rights transactions

Dec.

2002

Early

2003

Dec.

2003

Aug.

2004

Dec.

2005

Feb.

2006

June

2006

April

2007

June

2007

July

2007

May

2006

Renewal Rights

Renewal Rights

Renewal Rights

Renewal Rights

Acquisition

Reinsurance Agreement

Princeton Insurance Company

Total book of business:

Approximately $111 MM

The Covenant Group

Total book of business:

Approximately $62 MM

Alea US

Small-, Middle-market P&C book

Total book of business:

Approximately $450 MM for 2004

Muirfield Underwriters

Total book of business:

Approximately $60 MM

Acquisition of IGI Group, Ltd.

40% quota-share reinsurance agreement with Maiden Insurance Co.

Renewal Rights

Shell Acquisition

Acquisition

Key Hires

144A Offering

Hired European specialty risk and extended warranty insurance team hired in London

Associated Industries Insurance Company

Total book of business:

Approximately $100 MM

Raised ~$166 MM to finance acquisition of renewal rights of Alea and fund growth in existing businesses

Acquisition of Wesco Insurance Co. (WIC), from HSBC Insurance Co., an affiliate of HIG

Announce plans to acquire Associated Industries Insurance Services, Inc. Expected to close in 3rd quarter 2007


Renewal rights transaction overview
Renewal Rights Transaction Overview

Right to renew another carrier’s insurance policies without assuming historical liabilities

  • Typically occur when an insurance company needs to raise cash quickly or exit line

  • Opportunity to re-underwrite and cherry pick the book of business

    • Access to historical loss data

    • Seasoned book of business

  • Hire key employees

  • Policy renewals at sole discretion of AmTrust

  • Continuing payments to selling carrier only if policies renewed by AmTrust

  • Continue relationships with agents

These have been highly profitable, low risk transactions for AmTrust


Business model
Business Model

  • Deliver high teens ROE through:

    • Focus on earning underwriting profit

    • Target at or below 95% combined ratio

    • Proprietary technology platform designed to process small policies

    • Effective tax rate of less than 30%


Financial performance
Financial Performance

  • We produce an underwriting profit by having consistent loss ratios and focusing on expenses

  • As our premium has grown, we have:

    • Increased our operating leverage

    • Decreased our expense ratio

$526.0

98.4%

94.8%

95.1%

91.9%

89.6%

$399.7

$286.1

$210.9

$97.5


Recent financial results

6/30/2007

2005

2006

$399.7

$286.1

$526.1

324.1

259.2

436.3

249.1

216.0

329.0

8.8

8.2

12.4

35.7

16.4

42.4

159.6

142.0

210.1

32.0

30.1

43.3

31.5

33.4

49.0

59.5

29.6

70.7

16.6

6.7

17.8

$42.9

$20.1

$48.4

23.8%

17.3%

21.1%

64.0%

65.7%

63.9%

25.6%

29.4%

28.1%

89.6%

95.1%

91.9%

Recent Financial Results

Summary Income Statement

($ in millions)

Gross Premiums Written

Net Premiums Written

Net Premiums Earned

Fee Income

Net Investment Income and Realized Gains

Loss and LAE Expense

Acquisition Expense

Salaries and G&A Expense

Pretax Income from Continuing Operations

Income Tax Expense

Net Income from Continuing Operations

Annualized ROE from Net Income from Continuing Operations

Net Loss Ratio

Net Expense Ratio

Net Combined Ratio


Recent financial position

6/30/07

12/31/06

12/31/05

$1,052.2

$785.9

$415.8

52.3

44.1

17.7

239.3

147.8

81.1

40.4

29.4

20.8

(2)

269.8

178.2

77.5

1,654.0

1,185.4

612.9

386.0

295.8

168.0

452.0

323.2

156.8

123.7

82.5

51.6

(2)

(2)

287.6

143.4

118.1

1,249.3

844.9

494.5

-

-

60.0

379.2

340.5

58.4

379.2

340.5

118.4

$1,654.0

$1,185.4

$612.9

$6.32

$5.68

Recent Financial Position

Balance Sheet

($ in millions)

Cash and Investments

Reinsurance Recoverable

Premiums Receivable, Net

Goodwill & Intangible Assets

(2)

Other

Loss and LAE Reserve

Unearned Premium Reserve

(1)

Junior Subordinate Debentures

Other

Preferred Stock

Common Equity & APIC

Shareholders' Equity

Total Liabilities and Shareholders' Equity

Book Value Per Share

  • Trust Preferred Securities.

  • Includes assets managed on behalf of others.


Financial objectives for remainder of 2007 and 2008
Financial Objectives for Remainder of 2007 and 2008

  • At least 20% Organic Growth in Premiums

  • Combined Ratio of 95% or better

  • Investment Yield of at least 6.0%

  • Effective Tax Rate less than 30%

  • ROE of 15% or higher



ad